Why does the gender pay gap still exist?

The Gender Pay Gap (GPG) is defined as the percentage difference between the average gross hourly earnings for women and men. It compares the pay of  all working men and women; not just those in similar jobs, with similar working patterns or with similar competencies, qualifications or experience. 

In Ireland, the government plans to introduce legislation for mandatory gender pay gap reporting for business. This will oblige businesses to publish statutory calculations each year showing the extent of the pay gap between what women earn as a group and what men earn as a group.

Gender pay gap reporting is one part of a much-needed wider strategy to address female participation rates and employment gaps between genders. It will not on its own identify or solve the myriad of structural, cultural and policy causes for these differences, but it is a critical and welcome element.

While women make up over half the world’s population, it remains the case they are not fulfilling their potential in measured economic activity or in their contribution to the labour market. This has clear social and economic consequences, and business has an important role to play in finding solutions.

In the European Union (EU), the country with the largest pay gap is Estonia at around 22%, while the country with the lowest is Luxembourg at under 3%. Ireland sits in the middle with a gap of 14%. The gap in Ireland is actually the equivalent of women working for free for seven weeks out of the year. 

Women in the EU are less present in the labour market than men. The gender employment gap stood at 11.7% in 2019, with 67.3 % of women across the EU being employed compared to 79% of men.

The gender pay gap in the EU currently stands at 14.1% and has only changed minimally over the last decade. It means that women earn 14.1% on average less per hour than men. Women in the EU even earned 39.6% less than men overall in 2014. One of the reasons is the fact that on average women spend fewer hours in paid work than men: Whereas only 8% of men in the EU in 2019 worked part-time, almost a third of women across the EU (30.7 %) did so.

The reasons for the gender pay gap go beyond the simple issue of discrimination. They are a consequence of various inequalities women face in access to work, progression and rewards.

Sectoral segregation: Around 30% of the total gender pay gap is explained by the overrepresentation of women in relatively low-paying sectors, such as care and education. On the other hand, the proportion of male employees is very high (over 80%) in better-paid sectors, such as science, technology, engineering and mathematics (STEM).

Work-Life balance: Women spend fewer hours in paid work than men on average but more hours in unpaid work. In total, women have more work hours per week than men, which might affect their career choices. This is why the EU promotes a more equal sharing of parental leaves, an adequate public provision of childcare services and adequate company policies on flexible working time arrangements.

The glass ceiling: The position in the hierarchy influences the level of pay: less than 10% of top companies’ CEOs are women. The profession with the largest differences in hourly earnings in the EU were managers: 23 % lower earnings for women than for men.

Discrimination: In some cases, women earn less than men for doing jobs of equal value. However, the principle of equal pay for work of equal value has been enshrined in the European Treaties since 1957.

Under a proposed Gender Pay Gap Information bill, employers in both the private and public sector in Ireland will have to report on their GPG and publish information relating thereto. Initially, the bill will apply only to organisations with 250 employees or more, with the threshold eventually reducing to 50 employees or more over a three-year period. The bill will not apply to employers with fewer than 50 employees. The government has committed to making this bill happen.

Erica Carter
Erica Carter

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